Can banks give lower interest rates?

Let's ignore the obvious answer of "because money". But we keep seeing mortgage applications slipping and one huge reason is the super high interest rates. Soooo why don't banks just offer lower rates? Maybe I miss some behind the scenes curtain stuff. But what stops a bank/lender from offering 4% still? Is it more than just greed?

Update: knowledge hole has been shored up and it makes sense now. Thanks to the MVP who took the time.